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By Tamara
Lush
Two months ago, Javier Heredia found himself in a
different country without any of the local money in his wallet. Not a
penny, and he had some big purchases to make.
Heredia arranged to meet a currency broker at a busy
city landmark, and they agreed that Heredia would pay $130 for the new
money. As they met, sketchy characters with weapons gathered nearby. The
broker handed Heredia the cash without problems.
But the smooth transaction didn't happen here on Earth -
it took place in the fictional city of Freeport on the make-believe
planet of Norrath, inside the Internet video game EverQuest.
Heredia wasn't even himself at time; he was Gretk, a 5-foot-tall talking
rat.
In fact, the only thing that was real was the money.
Video games are nothing new, but the latest generation
of games, so-called MMORPGs, or massively multiplayer online
role-playing games, has spawned an interesting new wrinkle in electronic
entertainment: the virtual economy.
At auction houses and on eBay, players can use real
money from the real world to buy game money, implements
and weapons of their game's universe. Brokers take orders for fictional
currency, make-believe swords, even entire characters (a Ranger Wood Elf
male with "very nice gear" for $269).
The practice, while increasingly common as online games
grow in popularity, raises interesting questions about intellectual
property rights - shouldn't gamemakers get a percentage since they
invented all this stuff? - and whether gamers like Heredia are being
true to the rules of play.
Software and computer companies produce a wide variety
of MMORPGs with an array of fantasy worlds to explore, from outer space
to Tolkeinesque lands. Yet for all their differences these games share a
form of meritocracy; through experience (and hours of play) gamers can
build characters, called "avatars" among gamers, with ever
greater strengths and ever greater goods, permitting an ever more
interesting level of play.
Because the level of interaction in the games is so
high, and because the social rewards can be so great, it has become
attractive for players to pump the hard currency of the real world into
these fake universes, all in the name of achieving status and prestige
in the virtual society.
"Much like the World Wide Web has taken off into
its own little society, these games are becoming their own
societies," said Heredia, a 28-year-old information technology
worker in Miami. "These games have their own economies."
* * *
Edward Castronova is an economist at Indiana University
who specializes in the video game industry. He estimates that revenues
for online gaming were $1.9-billion in 2003 and will grow to
$9.8-billion by 2009. He also figures that up to $100-million in
real-world money is captured annually by dealers in virtual currency and
goods, and that number will keep growing.
Much of this economic output is driven by the Asian
gaming market, where people are avid residents of virtual worlds.
According to Castronova's survey of players, the average
gamer is a man in his 20s, with a full-time job and disposable income.
The average time spent within the virtual worlds is 20 hours per week,
he said, adding that 20 percent of the EverQuest gamers he surveyed
declared, "I live in Norrath but I travel outside of it
regularly."
Three years ago, Castronova knew little of this strange,
new world. He was a struggling economics professor at California State
University at Fullerton. His wife worked in another city, and to kill
time at night, Castronova started playing EverQuest.
Castronova and thousands of people worldwide would log
on at any given time - according to Sony Online Entertainment, which
owns EverQuest, more than 800,000 people subscribe to the company's
various games - and interact with one another in real time.
In EverQuest, like other MMORPGs, players create a
character, or avatar, that they will play each time they return to the
game. This character has special powers, such as strength or agility,
based on its race and class. An ogre, for instance, has more raw
strength than a half-elf, and a barbarian is better in combat than a Vah
Shir (a feline humanoid).
Avatars take on tasks in exchange for experience, game
money or items. Castronova found that fighting magical beasts
yielded friends, currency and prestige.
But in between killing magical beasts and accompanying
lizards on adventures, Castronova noticed that Norrath's economy was
booming.
He witnessed virtual bakers making virtual bread.
Virtual merchants selling virtual boots and hats, along with weapons and
armor. Even virtual homes. Castronova realized Norrath is a consumer
society. Everyone wants more game money (platinum is the
currency) to gain higher status and, well, amass more stuff.
He did some research, and the results were startling:
The average player was generating 319 platinum pieces, about $3.42, for
each hour spent "working" in the game. Castronova tallied the
wealth all the players created in one year in Norrath: $2,266 per
capita.
The exchange rate between Norrath's currency and the
U.S. dollar is determined in a highly liquid (if illegal) currency
market. According to the daily exchange rate published at GameUSD.com,its
value exceeds that of the Japanese yen and the Italian lira. The
creation of dollar-valued items in Norrath occurs at a rate such that
Norrath's GNP per capita easily exceeds that of dozens of countries,
including India and China.
Castronova discovered that EverQuest is the 77th richest
country in the world - or would be if it existed.
Since Castronova's findings were published - on the
Internet, of course - he was hired to a tenure position at Indiana
University, where he teaches telecommunications.
At 42, Castronova is still an avid gamer, and can be
found on any given night inside the World of Warcraft, another MMORPG.
His avatar is a "tall, elderly and dignified hermit."
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